Reinventing Journalism: Inside the Chicago News Cooperative

James O’Shea’s new book, “The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers,” chronicles his career at the Tribune Company, where he rose to managing editor of the Chicago Tribune and, finally, editor of the Los Angeles Times. We spoke at length about his book and, in a section too long for print but published here, about his latest endeavor, the Chicago News Cooperative.

Let’s talk about the Chicago News Cooperative. It will be two years old this fall.
You know, this in a way is sort of an R&D experiment. How can you finance quality journalism? Some people pay $2 for the New York Times on weekdays and $6 on Sunday, they aren’t the problem. It’s how are you going to cover City Hall and how are you going to pay for it because nobody’s going to say to you ‘I’m going to buy an ad on an exposé on Mayor Emanuel.’ They want nothing to do with that. We did find out people will pay for information. We did that ‘Early and Often’ political site for the election cycle. You paid 175 bucks for online reports delivered to you via email that you didn’t get if you weren’t a member. We got advertising revenue, we got maybe 300 or 400 people to pay for it—which wasn’t as high as I wanted, but when I tell people that number they say ‘well that’s pretty good.’ We’re now building an education site. We’re going to start trying to get some advertising revenue, but we’re still a nonprofit 501c3 heavily dependent on donations. If you cannot figure it out within a three-to-five year period, some way of sustaining yourself or taking fairly steep leaps toward self-sustainability, foundations and nonprofit is not the answer. You’ve got to get to the point where you’re going to have multiple streams of revenue, but foundations are not going to underwrite you for five years to produce news. They’re just not going to do it.

We have three kinds of employees. The full time staff, I think that’s maybe eight people. Then we have a group of people, we call them contract writers—there’s no contract, it’s just a handshake—but they’re paid on retainer to write for us. And then we have people who are just paid by the piece. I think that whole universe is about twenty people, but most are freelance or on the contract side of things, and that includes photographers. We have a web guy, we’re in need of a developer and we’re getting ready to go find somebody like that right now. It costs a million, a million and a half dollars a year to run something like this. We get money from the New York Times and have explored using this content in other papers. The Times stuff is exclusive to them for twenty-four hours only and then we can reuse it in any way we see fit, because it’s our content, we’re generating it. We’re playing around with the revenue model, trying to figure that out. But this is really kind of like a little R&D operation. I’d be happy to share any of my experiences with anybody. The next step we take will be education, and I think that will be very interesting. We’re in the process of planning that right now. And it’s all on the Internet—we’ll have print stories in the New York Times—but I think overall what I’ve learned in this is people will pay for information if it’s information they can’t get anywhere else and if it’s information they’re interested in. People will support you in developing the news if they think you’re on a path to some sort of self-sustainability.

Chicago, I think, is a city that has more of a feeling that the marketplace should solve this problem more than the foundations and the charity world. As one person said to me ‘You know, you’re not the food pantry.’ So raising money has been very hard because of that. And lastly, I just don’t think the answer to journalism’s problem is solely in the nonprofit thing. You’re going to have to come up with a way where you get multiple sources of revenue, and those sources will be the ones who sustain you, and if you can’t figure that out, then you aren’t going to be around and there’s going to be far fewer news organizations.

Let’s talk about the revenue. You say people will pay for stuff, but will they pay enough to pay for the cost of creating it? Like your political site: that revenue you generated for subscriptions, did it cover the cost?
We never really broke down what percentage of my editors’ time was ‘Early and Often,’ etc. I think it probably paid the cost of reporters doing it. I don’t know if it paid for editing and processing and all these other costs. It came close, I can say that. The whole idea of this is could you, and this idea has evolved, but can you create communities of interest around a particular subject. Can you find 10,000 people in Chicago that are interested in politics that will pay you for granular information about the political scene. And if you got them to pay $100 a year, $2 a week, can you get 10,000 people who are really interested in education, and can you get 10,000 people that are really interested in health, and can you get 10,000 people who are really interested in something else, like animals, pets or something? And can you put that together where you can get forty-to-fifty-thousand people paying you $2 a week for that kind of information? If you put that all together, you’ve got yourself four-to-five million dollars. That would finance probably a staff of twenty-to-twenty-five people. Then can you get editors who can take some of that and aggregate it, and serve it up to the public for free so everybody benefits? We did a pilot project with ‘Early and Often,’ but our real first effort is going to be on the education coverage, because I think there’s a real opportunity for coverage there that you can’t get anywhere else. We’re going to try and unveil that by the fall.

But haven’t we seen some of that for a while in Chicago through publications like the Chicago Reporter from the Community Renewal Society, who also had Catalyst in the education space. They’ve always sort of had the struggle of always having to try to raise money to hang in there. What’s different with what you’re doing?
Well I’m asking the people who read it and who are interested in it to help finance it, to become part of the process and to become engaged with it and get that kind of community engagement. Most of these organizations are going to foundations and I’m saying no, let’s go to the reader and have more interaction. People can say to me ‘I want coverage of this.’ Not that they pay for it, but they have a voice in it that they don’t have now. Can you get that kind of engagement by reaching into the community to really get engaged with the reader so that the reader doesn’t feel alienated by the process? When I was at the Tribune—I’ll never forget this—I used to answer my phone all the time. This woman called me and she said ‘Oh I’m so surprised you answered your phone.’ And I said ‘Well I always answer my phone.’ And she said ‘Well I was afraid to call.’ And I said, ‘Well what do you mean you were afraid to call?’ And she said ‘Well the Tribune is this big tower and you’re powerful people and it’s intimidating to think about trying to deal with you. And here I picked up and called you because I’m so mad at you and you actually picked up the phone.’ And I thought well why would people be so intimidated and then thought it probably is true, we probably created that atmosphere by the way we acted. This is an effort to make ourselves a little more human, talk to people about the kind of coverage that they want. And engage with them and try to figure out what they want, because most people don’t know what they want covered. Most people want to read news, but they want you to figure out what’s going on and tell them about it. Not going to them and saying ‘Well what do you want me to write about?’ Because half the time they don’t know. They know it when they see it. So this is my effort to say ‘Well let’s talk about this,’ and figure out what kind of questions you have so we can figure out what kind of coverage we have to give without you telling me to go cover X-Y-Z school. Maybe somebody says ‘You should do a story on such-and-such school,’ and you say ‘Well why would I do that?’ and it turns out the real story is something about early childhood education, but you’re informed by engagement with the reader that you really don’t get now.

I think one of the problems you’ve got now with the way newspapers are operating is that the demands on reporters is accelerating at the same time as the number of reporters has gone down. And a lot of the online stuff is just about trying to generate content. I think they’re less engaged because they’re so busy just generating content to put online to keep those sites fresh so you’ve got something to sell ads against, and you’re less engaged. This is an effort to say, ‘We want to be more engaged, and we want you to help us. And we want you to be a part of this organization.’ And that was the idea of the co-op.

So it’s like a public broadcasting model?
Somewhat. Only their model is go out and reach as many people as they can with the knowledge that maybe only ten to twenty percent of them will give them money. Mine is to go out and identify the people that are really interested in a subject that would help you to pay for it.

A gated public broadcasting?
I’m looking for communities of interest. We call them news interest networks. That’s what I’m looking for. Let’s find people who are really interested in education and try to serve that slice of the market rather than the whole market.

When you choose something like education, is that based on a public interest philosophy that you’ve developed, or is that based on market research that says there isn’t enough education coverage?
No, it’s not market research. This is based upon that I don’t need market research to tell me that people are interested in education, especially parents who are sending their kids to school. I think I know that. And it’s also an area where I perceive a reduction in the papers and people covering education. And it’s based on talking to educators in the field and hearing their alarm at the reduction of coverage. Even when the coverage was great they weren’t that happy with it. When I was managing editor at the Tribune we had a team of nine education reporters covering schools throughout the city. I don’t know how many they’ve got over there now, but I’d be surprised if it was two or three. And then when you go out and talk to people, you’re getting feedback that says, ‘Boy, I really want good education coverage, I would help support that.’

Talk about the New York Times. That’s obviously your highest-profile activity. How do you put that together? What interactions do you have with the editors there?
We really do practically everything here. We originate the stories, we figure out what we’re going to cover. We assign the stories, we do the initial edits. They have a few people in New York who handle these pages. But they kind of copy-edit them, look at them to make sure our standards are the same. It’s style and standards a lot of times. We’ve probably kept the standards editor at work most of the time. It’s not big stuff. It’s like, do you use the word ‘cops’? In Chicago, people put that in the paper all the time. You don’t do that in New York. Those kinds of things. Honorifics. Everybody’s ‘mister so-and-so.’ We coordinate on that sort of thing. They do the layout, write the headlines, but if we don’t like a headline we’ll tell them, ‘Well why don’t you change it, we don’t like that.’ Photos, that was a real interesting thing. Papers in Chicago are more photographically in your face. They like big images. New York Times kind of likes distant, bigger-picture kind of photos. We had to make sure we were all on the same page with all of that. Generally, we produce the copy, and they send us a check at the end of every month. Not a big enough check if you ask me.

That’s what I wanted to ask you. Are they paying the freight for what they’re getting or are they getting a bargain? Could they replicate what they’re getting from you on their own?
Yeah they could. It would cost them more than it’s costing them through me. But they could do it on their own.

So that raises the question of whether basically what’s happening on one level is that the New York Times, a big for-profit company, is getting subsidized by the foundations to build a presence in Chicago?
The whole original idea was to leverage this content, so I could take the cost of producing and spread it across more platforms. So when you talk to foundations you tell them I need the investment so that I can spread the cost of doing this, because the Times is not saying we own this copy. They’re basically saying you give it to us on an exclusive basis for twenty-four hours, and in some cases not even twenty-four hours. So they’re just a customer of ours. If all I’m doing is the New York Times, yes I’m subsidizing it. If I can take that content, use it online, start generating revenue online, if I can use it in news interest networks, and I can start getting advertising from these sources, then they’re not subsidizing me. So it really depends on your ability to spread those costs.

Are they putting it on their website as well?
Yeah it’s on both sites. They have a regional section on their site where you can get it. And that drives traffic to ours too. When we first started off they made an initial capital contribution to the co-op in the first year to help us get off the ground. Part of the value of it, is they have a strong reputation that had a great impact that helped us a lot. And so part of the bargain is getting that. So it’s not just totally a monetary judgment.

And obviously it brings a very big profile to what you’re doing. I think you guys did something with Timeout Chicago. What other entities are you guys working with? Any relationship with the Trib or Sun-Times at all?
The Sun-Times sometimes sells ad space. And that’s with an arrangement with the New York Times. The New York Times gets that revenue. And they do events with us. So they help us in those kinds of ways. There’s been no editorial… Although the Sun-Times CEO Jeremy Halbreich called me once. I think they’d be open to exploring some kind of relationship, we just haven’t done it yet. We’ve talked to some other suburban papers, but they’re all in the budgetary dumps. I think if the economy got better and the ads got better, they’d start looking at us and ask if they could buy some of that content. The Timeout Chicago deal was a onetime deal. But I think they’re interested in more collaboration with us. We’re kind of out there starting to look around for that. I’m not ruling out by any means partnerships with legacy media, because I think that could work.

How are you guys like a newspaper news room and how are you different, operationally and vibe and everything else?
It’s quieter. This is much more of an enterprise kind of operation. We do have people covering City Hall. We do have people covering the school board and all that. But they’re not really trying to produce turn-of-the-screw coverage. They’re looking for stories that the dailies won’t touch or won’t do, or that we think of, or more commentary. We’ve got Dan McGrath, and David Greising writes a lot too. And you’ll see more of that. But we’ve got this collaboration with WBEZ where we share a reporter in Springfield, and that’s funded by the Joyce Foundation. And so Kristen McQueary will write pieces for us and take the same story and do a report for WBEZ. And we’ve found that to be a very good experience. We’re getting together maybe this week or next week to talk about casino coverage. In a sense that’s not like how a newspaper operates because you’re dealing with partners, what used to be considered competitors. We’re not as insular about that as you’d find at the Sun-Times or Tribune where they’d say ‘Oh, they’re competitors and I’m not going to do anything or share anything with them.’ The way it is like a newspaper is you have a lot of people who are interested in news, brainstorming sessions, trying to look for a story that no one else is doing. It’s different. It’s more a place where people are here doing their own thing, than it is for people to come here and it’s a job. For some people it’s a job for sure because it’s their only source of income. But it’s kind of a hybrid organization.

What’s the one big lesson you’ve learned since you started?
I thought I would have more public support for quality journalism. Part of that is a function of my fundraising skills, which aren’t great. It’s not something I ever wanted to do and it’s not something I find incredibly fun, but I do it. That part I thought I’d have a little easier time. Secondly, I get a lot of people who say I really love what you’re doing, but in terms of finding people to be supporters, it’s harder. I can see the Tribune being cool towards us because a lot of us are former Tribune people and they consider us traitors and a lot of other stuff. But I think it’s good that you’ve got a national paper that’s willing to put some resources in here and give people local news. And you get to play around and experiment with it. I thought the relationship with the Times would be a little harder than it is. It’s not. They’re real professionals. It’s been an honor to work with them. The biggest surprise to me is probably on the fundraising side of things. I found out how difficult it is to raise money. You sit down and say okay my goal is 50,000 people, that’s less than one half of one percent of the metropolitan area of Chicago. But it’s a bitch to get them.

You’re kind of an invisible entity in some ways, as a brand. Unlike WBEZ or Channel 11, you’re not a brand that the public connects with.
I agree with you there. It’s hard. We’re trying to do that with events right now. We’re trying to get our brand out but we don’t really have the money for a marketing campaign. The Times is trying to help with some of the ads they’re doing. We had one event at the City Club. We had one where Jim Warren interviewed David Axelrod, and that sold out in five hours. If we can get sponsors for those, that not only gives us income, but a higher order of recognition. We’re coupling publicity of my book with a lot of CNC stuff. But you’re right, a lot of people who know us see us as the guys that produce content for the New York Times. But our web traffic is growing. I think the awareness is going to grow as time goes on. It’s hard to come in here, not have your own publication but develop that kind of brand awareness. And that’s why sometimes partnering with an existing legacy media company in a visible way, you can get your brand out there quicker.

If I’m reading between the lines, you’ve indicated that you’re giving this five years?
I started this thing and said I would help get it off the ground, I’d be a catalyst and then I’d get somebody to run it. So I don’t know if I’ll be around for five years. I’ll be 68 next month. But I will be a supporter for one way or another for five years. Will I be the editor? It may get to the point where it needs some fresh blood. I can see somebody younger coming in here. I’d actually like to get back to writing. When I left LA, my plan was to come back, maybe find something to do part-time and write. Maybe write this book, although I wasn’t too wild about that idea at first.